Indoor surf parks aim for big money

FORTUNE — In a lifetime of promoting the sport he loves, Robbie Meistrell has long sought the power swell capable of propelling the laid-back world of surfing into a universal, lucrative phenomenon rivaling golf. Now, he swears, he’s found it: wave-machine generated, mainly indoor surfing, driven by fresh technologies that can replicate six-foot barrels and chest-high mushy waves, in every imaginable, computer-sequenced, ocean-imitating combination, at surf parks the size of football fields. A pair of these emporia will soon open in quintessentially non-beachy locales: in the New Jersey Meadowlands at the forthcoming, gigantic new American Dream mall built by Mall of America developers Triple Five originally; and in snowy mountains of Sochi, Russia, home of the 2014 Winter Olympics.

“This breakthrough in wave machine surfing is what we’ve been waiting for all these years,” says Meistrell. “It could multiply the number of surfers worldwide, and easily multiply the size of the surfing market by a factor 10.” Today’s soccer moms could become tomorrow’s surfing moms, and look for the Olympics in the 2030s to host contests on computer-planned waves, a kind of aquatic, next-gen Super Pipe with surfers in the role of snowboarders.

Meistrell is the scion of a surfing business dynasty: In 1953, his father and uncle founded water sports retailer Body Glove, and in the 1960s invented the first practical wetsuit for surfers. Today, Meistrell serves as Body Glove’s CEO, licensing the famous brand name for bathing suits, snorkels, water shoes, and waterproof cell phone cases, as well as those signature, super-stretch form-fitting neoprene huggers that keep surfers toasty in the icy foam. The family’s flagship store, Dive ‘N’ Surf in Redondo Beach, Calif., remains a legendary destination for water sports enthusiasts. Meistrell runs surfing camps for kids, sponsors pro surfing tours and events, and at age 62, still paddles out to catch the curls at L.A.’s Manhattan Beach.

Yet Meistrell has faced years of frustration in his campaign to attract hordes of new surfers, and hence build the gigantic market that, he believes, the sport merits. “When you get the feeling of the water moving beneath your feet, there’s nothing on earth like it,” he marvels. “It’s totally addictive.” The rub is that millions of potential surfers live too far from the ocean to experience that magical sensation. And even on the coasts, kids and neophyte adults shun the sport because once they tote their boards to the beach, the fickle ways of nature furnish waves that are too big, or arrive far too infrequently, for beginners to learn. The weather delays and long waits between rideable waves also soak surfing’s allure as a spectator sport. “You go to Rincon Beach in Santa Barbara,” says Meistrell, “and the surfing is good maybe four or five days a month. In most places, you paddle out and catch two waves in two or three hours. It’s not that surfing is so hard to learn, it isn’t. It’s that it’s so hard to practice.”

Another problem is what Meistrell calls a kind of tribal “localism.” “On the good days, hordes of people from all over flood the surfing beaches,” says Meistrell. “The groups of local surfers don’t like it, and don’t want you there.”

Hence, surfing remains a major cultural trendsetter, shaping fashion, music, and lingo. But measured in dollars, it’s a decidedly minor sport. Surfers worldwide spend around $10 billion a year on equipment, camps and lessons — TV revenues and ticket sales are miniscule, by the way — less than one-sixteenth the total sales golfing commands.

Today, Meistrell views the innovations in indoor — as well as open-air — surf parks as the game-changer. Surf parks have been around for decades. Their appeal, however, is limited. The big ones typically produce waves at extremely long intervals that severely limit how many surfers they can serve, and hence their revenues. The small ones generate thin swells that move far faster than normal waves, so that denizens need skateboard-sized boards sans fins to ride them.

For Meistrell, the breakthrough arrived via the new technologies developed by a surfer-cum-engineer named Bruce McFarland. After receiving a graduate degree in fluid dynamics from the University of California, McFarland worked as an aeronautical engineer at TRW (TRW), then began studying how powerful pumping systems could be used to replicate the process that creates ocean waves in nature. McFarland’s new technology generated its first swells in a tank in his garage at a full three inches in height. In 2000, he founded American Wave Machines, and by the mid-2000s had installed pioneering, outdoor surf parks in Peru and the Caribbean.

Intrigued, Meistrell visited the park at the Beaches Resort in Turks and Caicos in 2008 with his two young sons. “We all got completely hooked,” he says, “we were surfing until 9 at night. Our legs were like rubber.” He next recruited two pro surfers, Cheyne Magnusson and Anthony Walsh, to try the installation at the giant Boulevard de Asia shopping complex south of Lima. “I found it appealed to the pros as well, because you can practice so much in a concentrated period,” says Meistrell. “Cheyne and Anthony thought it was a great training device for the legs and the core.” Meistrell was so impressed that he persuaded American Wave Machines to appoint him chairman, a position he still holds.

American Wave Machines offers two distinctly different technologies, one for small arenas, the other for super-sized parks. The original system, called SurfStream, creates stationary waves in pools between 12 and 24 feet in width. Hydraulic pumps force thousands of gallons of recirculating water over fiberglass modules to create waves that curl continuously in place, so that surfers can move back and forth across the face of the wave, but now forward. McFarland’s innovation consists of designing a system sufficiently powerful to form the type of thick, standstill, white water swells that attract adventurous surfers in rushing rivers. At these smaller surf parks, folks use regular surfboards with fins, so that the experience is far closer to ocean surfing than the experience at the older wave-making facilities.

American Wave provides the equipment, installation, and consulting services to owners who manage the parks. The first indoor facility in the U.S. featuring its technology debuted in late 2013, Surfs Up in Nashua, N.H. Expert surfers can program four-foot barrel waves on an iPad, and mothers bring their 5-year-olds for lessons on one-foot curls. The kids can also try skydiving in the same facility. Today, American Wave has six of the smaller parks in operation and two more under construction, one in South Dakota, and another in Montreal.

The second technology — PerfectSwell — replicates real, traveling ocean waves, and, if it proves as lucrative as Meistrell predicts, will power the giant surf parks of the future. These parks can be over an acre in size, and they’re typically around 160 feet in width. The waves can reach a hurricane-scale eight feet, and they advance the full length of the pool, offering ocean-worthy rides of as long as 20 seconds, breaking when they reach the shallow end, just like the real thing.

Here’s how the technology operates. At the deep end are 16 vertical chambers placed at 10-foot intervals, each extending from near the pool floor to above the water level. Powerful commercial blowers push air at high velocity into the top of the chambers. The rushing air forces a piston-like flood of water from the chamber into the pool, producing waves.

By altering the timing and sequencing of the water blasts from sixteen chambers, the system can generate a wide variety of sizes and types of waves in rapid sequence, leaving just enough time in-between for customers to paddle out for the next ride. It can produce computer-generated barrels and peeling swells that break either left or right, or “pop up” waves that launch acrobatic surfers skyward. For example, a peeling “big closeout” wave that extends the entire 160-foot width of the pool and travels straight toward the shallow end lasts around 20 seconds, and can accommodate 16 surfers at once. In fact, three big closeout waves can run, one behind the other, at the same time, so that 48 surfers can be riding at any one time.

Serving large numbers of surfers, says Meistrell, is what’s needed to make the parks highly profitable. That’s what American Wave provides. These systems are expensive: The SurfStream costs between $4 and $6 million, and the PerfectSwell far more. Meistrell thinks that the smaller SurfStream parks can greatly augment the profitability of struggling retail sporting goods stores. “Brick-and -mortar stores are under pressure from the Internet,” he explains. “Adding a surf park brings in more shoppers. The park should also be highly profitable on its own.” Meistrell reckons that these small parks can attract 50 people at a time who pay $30 each, and catch 25 to 40 waves in an hour session. That formula would generate over $4 million a year in revenue after personnel and power costs, he estimates, allowing owners to pay off the cost of equipment in around 18 months. The numbers could work — it all depends on whether customers find these parks as enticing as Meistrell expects, something we won’t know until potential owners get to review the experience of today’s pioneers.

Meistrell views the giant PerfectSwell parks as the perfect complement to the array of attractions at the new generation of mega-parks. “People want the total experience, they want skydiving, indoor skiing, zip lines, mountain wall climbing — and surfing,” he says. “It all works as a package.” The mammoth parks could also make surfing a major spectator sport. Promoters could organize pro events in surfing arenas around the country without worrying about the weather, with contestants matching their skills in similarly challenging runs of cascading surf. The surfing community has been trying to get on the Olympic calendar for years, without success. “In the ocean, the guy who’s lucky enough to catch the biggest wave often wins, even if he’s not the best,” says Meistrell. For the Olympics, he says, all the contestants would face waves or series of waves of similar difficulty. The vagaries of nature that are blocking surfing’s Olympic hopes would vanish. “You would score people on how they handle six-foot barrels or four-foot mushy waves, like the long and short programs in figure skating,” he says.

The future of super-sized surf parks will depend heavily on the success of the first two ventures in New Jersey and Russia. The not-yet-opened $3.5 billion American Dream will rank among America’s biggest shopping extravaganzas and offer the kind of total adventure Meistrell advocates. Visitors can experience indoor skiing, indoor skydiving, spin on a giant Ferris wheel offering views of the New York skyline, and catch the curls on their surfboards, all in the same gargantuan complex opposite MetLife Stadium. That’s fast company. If indoor surfing proves a sensation in New Jersey and Sochi, it’s reached the big time. And for surfing everywhere — the stores, the events, the TV sales, and the new parks — that means big money.

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